Government Doesn't Create Jobs
Economic Policy: In a joint op-ed with
the British prime minister, President Obama
admits that jobs are created by an innovative
private sector. So why is he strangling ours
with regulations, rules and taxes?
We would hope it was a candid admission of the truth rather than just boilerplate rhetoric in an op-ed in the Times of London by President Obama and British Prime Minister David Cameron. But there it was: "Governments do not create jobs; bold people and innovative businesses do."
For once, the president is spot on. Businesses create jobs to fill a need, and their incentive is profit. Businesses invest; governments can only spend. Businesses create wealth, as do their employees.
Government consumes wealth and sucks the economic oxygen out of the room. Its employees create paperwork and regulations that restrict economic growth.
There's no better example of this than the Obama administration's failed stimulus.
According to a report by Ohio State University economists Tim Conley and Bill Dupor titled "The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled," the 2009 stimulus created or saved 450,000 state and local government jobs while destroying or forestalling a million private sector jobs. That's a net loss of half a million jobs.
Jobs aren't created by high taxes, bailouts and subsidies. Nor are they created by the government picking winners and losers or buying car companies and the like.
No. Jobs are created by cutting taxes and regulations and letting the entrepreneurial dogs run.
This is the slowest recovery since the 1930s, if it can be called that (see chart above), as businesses beset by the highest corporate tax burden in the world, the looming job-killing presence of ObamaCare and cap-and-trade by regulation sit on the sidelines, fearing the future.
Obama and Cameron say in the op-ed that they "know that our nations are self-reliant and infused with the entrepreneurial spirit" and have "proud traditions of out-investing and out-building the rest of the world." But it's no longer true — at least on this side of the pond.
As Julie Borowski of FreedomWorks points out, a record number of Americans — 1-in-6 — are dependent on government anti-poverty programs. Nearly half of Americans, 47%, pay no income tax at all. More people than ever are riding the wagon rather than pulling it.
The innovative entrepreneurial spirit of Thomas Edison, Henry Ford and the Wright brothers gave us the incandescent light bulb, the automotive assembly line and the airplane. Government is banning Edison's invention and forcing us to buy mercury-filled imposters in the name of saving energy.
Through fuel-efficiency standards and regulations, government tries to force us into shrinking clown cars that few want to buy, or electric cars that require huge government subsidies to manufacture and sell.
And the administration makes war on Boeing because it wants to create jobs by building its innovative 787 DreamLiner in a nonunion state.
This administration has let loose the dogs of regulation in the form of Environmental Protection Agency rules that restrict economic growth and energy development. Even as the energy industry finds innovative and entrepreneurial ways to produce more, such as oil and gas from shale rock, the government finds new and creative ways to stop them.
The feds favor green energy, even though the experience of Spain, for example, found that through diversion of economic resources, that country's hugely expensive tilting at windmills resulted in the loss of 2.2 jobs for every "green" job created.
Then there's ObamaCare, a medical nationalization that is so draconian in its mandates on individuals and businesses that thousands of exemptions or waivers had to be granted to those politically favored by this administration.
Obama and Cameron are right: Government doesn't create jobs.
But it can destroy them through taxes, regulations and misallocation of resources.
The best thing for government to do now? Just get out of the way.